The S&P 500 reached an all-time high in early March when it briefly touched the 2400 level. Since then the Trump administration suffered a public relations nightmare at the hands of the Freedom Caucus Republicans in the House of Representatives. The Trump administration drafted a compromise that failed to even reach a vote in the House. The Trump administration pulled the bill from enduring a vote once it became clear that the Freedom Caucus was .not budging on their standards for “repeal and replace.”
Since then the Trump administration has clearly signaled that they are going to move on from healthcare and onto tax reform. So is the Trump bump in the markets over? The answer remains to be seen but it is safe to assume that some level of success on “repeal and replace” was baked into the rally that the Trump administration has enjoyed in the markets.
A Trump administration bounce in the markets is what many of his voter’s had hoped for when they cast their ballots. A drop in the markets would not only be a disappointment to them but a disappointment to the country as a whole. Despite the intense scrutiny that Trump has felt in his short sixty days as President, it is more than most President’s have felt in this short time in office.
The story of Trump is intensely from being upper middle class to intensely rich. It is a story that draws on the first inclinations of wanting to be President in the late 1980’s to achieving that goal in 2016. So to see his first major legislative goal become a failure had to be a devastating blow to the ambitious business man.
There is no question that he will bounce back with both tax reform and infrastructure revitalization.
First tax reform will push the 50% bounce back all the way to 100% and more. The 0% tax on the poor would give them more to spend and the drastic cut to corporate taxes would make them more competitive on the global scale. .And far beyond the 0% tax on the poor the tax cuts to the middle class would increase spending power and increase their ability to reinvest into their own small businesses. Many on Wall Street attack the increased spending on carried interest and the increase on the capital gains tax but Trump and his administration justify it to both build the wall and in implement a tariff on both Mexico and China. Both tariffs have already terrified businesses to bring jobs back to the United States.